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1 I D C T E C H N O L O G Y S P O T L I G H T C o n f r o n t i n g C h r onic Disease at the Point of M a x i m u m I mpact January 2017 Adapted from Business Strategy: Demand for IT Services Related to Healthcare Provider Analytics by Sven Lohse, IDC Health Insights #US Sponsored by PwC The challenges of chronic disease such as diabetes are complex. Balancing investments and outcomes, which responses are best? What tools, approaches, and decisions are most likely to achieve the best results for individuals, populations, and the health ecosystem? To address complex chronic health challenges from many points of view requires a comprehensive solution that balances quality and cost for all health stakeholders. This Technology Spotlight examines the need for and benefits of collaborative healthcare solutions for the management of chronic diseases. It also examines the role of PwC's Bodylogical offering a hybrid of professional services and technology based on a rigorously validated, dynamic, digitized model of the physiological systems of the human body in addressing the marketplace for holistic solutions to chronic disease. Introduction Chronic diseases such as diabetes threaten the health of large populations and the long-term financial viability of the U.S. healthcare industry. According to a study published in 2016 by The Lancet, the global cost of diabetes is now $825 billion per year. (The study did not differentiate between type 1 and type 2 diabetes.) In the case of type 2 diabetes (85 90% of diabetes cases), prevention and early diagnosis are critical to reducing the number of patients who enter high-risk categories and reducing the clinical and financial impact of the disease. Diabetes is only one of several chronic diseases with growing impact around the world that demand quantum improvements in insight and response. Just as the causes and effects of chronic disease are multifaceted, responses to the problem also have to be multifaceted. Stakeholders from across the health ecosystem must be mobilized to collaborate. Similarly, the data, systems, platforms, and tools have to work together in the hands of expert users. At the same time, the patient (or consumer) must remain the center of the health ecosystem: motivated, informed, and supported in managing his or her own health. The impact of insight, therapies, and clinical and environmental interventions can be enhanced by digitized tools and platforms that present scientifically valid, longitudinal views of the impact of multiple variables, isolated or in combination, on chronic disease. Data, tools, and solutions must be built, implemented, financed, and supported in terms of therapeutic areas, individuals, populations, geography, and recommendations for action that scale from the individual to populations. Health organizations including providers, payers, pharmaceutical/life sciences companies, and new entrants from other industry sectors know that holistic solutions to chronic disease have to speak, ultimately, about and to the individual's history, physiology, and environmental context. Whether these solutions involve new therapies, new therapeutic approaches, new institutions, or new technology, meaningful changes in behavior have to be initiated and led by the individual patient or consumer. US

2 Benefits In the past, scientific models of human physiology were largely confined to single systems. Today, efforts to integrate these models are yielding software tools and platforms that simulate the likely progression of chronic disease based on the individual's lifestyle decisions and behavior. Computer simulations about health outcomes can now be integrated with the many variables that determine health. These simulations can then be used to predict the impact of various behavioral, clinical, and economic factors on the course of chronic disease for both individuals and populations. Such analytic software tools and platforms will be most effective when integrated into professional service offerings. Potential benefits derived from hybrid offerings include the ability to provide: Predictive insight from many perspectives. An accurate, dynamic, predictive model integrates many sources of physiological and non-physiological information from the health ecosystem and elsewhere. It leverages historical data and predicts the probabilities and outcomes of future scenarios. Decision making at the point of intervention. Real-time analytic tools are needed to facilitate insight into investment return on R&D, clinical, and policy decisions by governments, payers, and employers. Such offerings have the potential to increase the impact of healthcare decisions and consequent interventions. Scientifically current modeling. Analytic tools should represent up-to-date research available on chronic lifestyle diseases. Information about physiological systems (e.g., metabolism) should be integrated with environmental data to model unique lives as well as the variables that impact the functioning of a population. In the context of such healthcare offerings, analytic software tools and platforms also benefit from the following functionalities: Cloud based. In the health industry, access to computational power influences the practicality of its impact. The advantage of a cloud-based solution is that varied users in varied settings can access and scale its capabilities on demand. Integration ready. Application programming interfaces (APIs) enable analytic tools to be integrated into a variety of systems, tools, and hardware. Both input and output can be linked to clinical records, personal wearables, mobile devices, research repositories, and community records, which can analyze this data in unison to understand health. Secure. A prerequisite for adoption in healthcare is that the offering must meet the data security and protection for the type of data being used. Privacy and security provisions have to be adaptable to a variety of governance scenarios. Considering PwC The Bodylogical offering part of PwC's DoubleJump Health initiative is a hybrid of technology and managed services that puts the power to simulate and predict the likely progression of chronic diseases into the hands of individuals as well as clinicians, policy makers, drug makers, employers, and other health industry specialists. The hypothesis is that better and more lasting health solutions can be distilled from confrontations with accurately synthesized and explicit (predicted) insight about the consequences of behavioral choices, environmental factors, and clinical interventions. Drawing on PwC's expertise, technology, and insights from across the health ecosystem, the Bodylogical solution confronts the most complex health industry challenges of chronic disease where it can make the greatest possible impact: at the point of individual decision. (Bodylogical can address needs across the entire spectrum of health, from prevention and wellness for athletic individuals to population health management for acute and chronically ill patients. This Technology Spotlight focuses specifically on chronic disease management) IDC

3 Chronic diseases currently supported by the offering include type 2 diabetes, hypertension, cardiovascular disease, and obesity (as well as some associated comorbid conditions). The Bodylogical platform and its proprietary analytics have been developed by biomedical engineers who have conducted rigorous validation of the model. Major use cases include: Identification and management of chronic disease for individuals and populations Looking at metabolic and other systems holistically to understand their interactions in the face of specific diseases and then evaluate their financial impact Weighing the relative costs and benefits of various clinical or community interventions Expanding stakeholder collaboration through the use of common data and analysis Identification of drugs most likely to achieve FDA approval through use of virtual trials Earlier identification of future high-risk patients, such as those at risk for type 2 diabetes, to address their needs before the costs of their treatment become high Translating wearables and Internet of Things (IoT) data into meaningful analysis that can be acted upon Gaps in a data set may be filled with government-sourced information for a relevant population. Strategic Perspective PwC has leveraged its spectrum of strategic and analytics expertise from the health industry and augmented it with expertise in biomedical engineering and systems biology to develop a unique offering within the consulting industry. Bodylogical integrates and exploits existing science and health data from clients, individuals, and governments in a new way. Clients that utilize the Bodylogical solution can benefit from: Scalable services. Bodylogical offers health organizations, governments, scientists, employers, and other stakeholders (e.g., new entrants to the industry and employers) access to scientific analytics, raw computational processing power, and expert skills at scale and speed, without the capital investment otherwise needed to develop similar capabilities to address chronic disease challenges. The cloud-based platform can be licensed and accessed via application programming interfaces or through more traditional consulting arrangements. Ability to address the patient or consumer first. Bodylogical tools and services confront the challenge of chronic disease at their source: an individual's behavior and decisions. Scalable tools and supporting service capabilities enable development of new and more effective healthcare for individuals and large populations in ways that have lasting impact. Technology momentum. Dynamic, iterative development of effective, actionable, and predictive analysis is the foundation of the Bodylogical offering, augmented and improved by learnings from specific use cases and client experience. As the adoption of cloud, big data and analytics, IoT, mobility, and other technologies continues, awareness in the marketplace about the possible applications for Bodylogical and systems dynamic modeling will also rise IDC 3

4 Integrated perspective. Bodylogical supports holistic solutions that integrate and analyze data from the internal human environment (physiological systems) and the external human environment (community, healthcare institutions). The scientifically validated model can then make well-balanced, predictive assessments of the potential costs and benefits of health interventions and investments from a variety of unique perspectives. Privacy and security. On behalf of clients and the individuals' data for which they are responsible, PwC manages compliance according to relevant institutional and governmental policies. Support. Bodylogical is typically accessed via APIs and is supported by PwC experts in concert with specialists from across the spectrum of health industry stakeholders. The context and objectives of its users determine the types of support drawn from PwC's many services offerings. Bodylogical is a managed service offering built around PwC's proprietary systems dynamic model of human physiology, tuned to combat chronic disease for individuals and populations. This scalable offering can help the individual as well as populations or societies make better health and financial decisions. Health organizations can use Bodylogical to gain insight, make recommendations, create organizations, and build products and services. PwC works with clients to improve innovation, collaboration, and care delivery within a variety of business models and organizational models. Challenges Strategic ambiguity. IDC Health Insights' surveys of health organizations indicate they often suffer from clouded strategic vision. Health organizations face competing imperatives to pursue organic growth, make operational investments in quality measurement, pursue value-based care initiatives, and reduce costs. Difficulties in establishing appropriate strategic objectives may be compounded by an impaired capacity to implement initiatives across internal and external organizational boundaries. Cash crunch. Health organizations tend to work at very low profit margins, which restrict investment funding for innovative technologies and initiatives. Health organizations transforming their business or operating models to deliver care on the basis of outcomes and shared risk may experience cash or liquidity problems that further restrict potential investment capacity. Full engagement of both the sick and the well. The current approaches, tools, and methods used to empower, motivate, and understand the patient and consumer are relatively ineffective and unreliable. The individual's apparently normal tendency to discount the long-term effects of unhealthy behaviors continues to confound healthcare stakeholders and intervention approaches. Lacking technologists, not technology. Hiring, training, and retaining professionals with biomedical engineering and systems modeling expertise (which is not a typical consulting skill set) may constrain or delay development of PwC's offering as well as deployment and use of the offering in health organizations. Establishing credibility. PwC has not typically worked within scientific groups on direct R&D efforts. To establish credibility in the pharmaceutical/life sciences and clinical markets, PwC will need to build its brand with the scientific community through validation efforts and publications IDC

5 Trends The growing incidence of chronic disease and associated comorbid conditions worldwide creates pressure from consumers, patients, governments, employers, and other stakeholders to simultaneously improve healthcare cost, quality, and access. Health organizations and governments are increasingly incentivized and aligned to reward and reimburse health outcomes. The growing number of value-based care organizations adds to the rising percentages of revenue at risk, which generates industrywide demand for data, data analysis, and actionable insight. Meanwhile, scientific advances continue to improve the accuracy of computerized predictive modeling of human physiological systems and their relationships to environmental factors. Together, these industry trends offer both opportunities and incentives to improve healthcare outcomes. These industry drivers are supported by technology innovation that enables health industry stakeholders to collaborate cost effectively. The adoption of hybrid software/services solutions is supported by systems integrators and outsourcing vendors in several important dimensions of the market: Analytics and big data. These technologies answer the demand from healthcare users to measure, benchmark, analyze, and predict payment for and delivery of healthcare in terms of outcomes. Note that shortages of healthcare data scientists constrain adoption of analytics. For users, outsourced analytic service vendors continue to help speed adoption, reduce capital demands, and smooth spikes in demand. Mobility and IoT. Rising adoption of mobile devices and IoT sensor technology helps users gather and communicate data, whether personal, clinical, or environmental. IDC research indicates that service providers rather than hardware providers have become the primary integrators of many categories of IoT technology. Data explosion. The size of data sets of a clinical, financial, environmental, or scientific nature continues to expand dramatically. Largely as a result of the work of systems integrators, data sets from electronic health records (EHRs), payer claims databases, government quality data, and elsewhere are gradually becoming more accessible. Conclusion Growing populations suffering from (or at risk of suffering from) chronic diseases such as diabetes present enormous challenges to communities, pharmaceutical manufacturers, payers, care delivery systems, employers, and governments. These challenges call out for making better use of available data from consumers, electronic medical records (EMRs), and IoT to better understand populations and individuals. Health industry stakeholders must be better armed with analytic tools to assess and translate this data into meaningful information that they can use to inform decision making. For this, analytics can yield better insight into the most likely outcomes of future disease progression for individuals and populations and, in turn, the most likely outcomes of future intervention scenarios. Few solutions focused on chronic disease have succeeded in addressing the patient (or consumer) directly. Information and resources made available at the point of individual decision and behavior modification are most likely to motivate and empower individuals to successfully manage their own health. To the extent that PwC can address these important challenges of chronic disease for stakeholders, the Bodylogical offering has a significant opportunity to address these challenges not only at the population and society level but also at the individual level IDC 5

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